Future-proofing procurement in the 21st century

26 July 2017

At
a time when business is warming to procurement’s contribution, the skills
required by our profession must become stronger than ever before. In fact,
learning and development must be continuous and embrace a broad range of skills
and capabilities.

To become fully effective as a strategic business partner, procurement
specialists must have people skills, business skills and new procurement
skills. In terms of training and skills development, I get a sad feeling that
everyone is looking the other way, waiting for someone else to lead this vital
role. We are often told that this is everyone’s responsibility, but especially
that of the procurement individual. According to our professional body, CIPS,
talent management is a key priority for the 21st Century. However, an
individual rarely knows what they need. This is especially true for a category
or contract manager as they are often too preoccupied with the daily grind and
detail to have a wider perspective on their own skills.

The
problem with trainingIf you
undertake training courses for category management, contract law or
negotiations, then surely it is “job done”, right? In truth, this approach to
improving procurements skills is not effective. So we cannot be surprised that
the output from this approach is confusing to others. A starting point is often
an individual development plan. However, this is seldom coordinated or
cross-referenced with any business goals. Hardly very strategic. All too often,
procurement development is not commercial or business-focused. Instead, it is
usually about having specialist qualifications. If the business does embark on
some training program for procurement, it is usually focused on cost pressures.
To avoid being away from the office, courses are often delivered through
impersonal e-learning. With poor retention and difficulty in applying the
learning in the business, e-learning is not a substitute for sharing
experiences face-to-face at training workshops.
Furthermore, the majority of courses are not delivered by trainers with
real-world experience. They are teachers rather than practicing buyers. Over
time, procurement has become fractured with multiple takes on best practice
models.

Seeking
alignmentProcurement
objectives must always be aligned to the business. Unfortunately, procurement
has been promoting itself, missing the importance of the business needs. This
has resulted in procurement teams and professionals being bypassed on major
spend decisions and on out-sourcing projects.
Almost 50% of all the major spend decisions are made outside of the procurement
function. Especially in IT, out-sourcing and off-shoring functional budgets are
hard fought. So when budgets are secured, the business becomes protective and
considers this as their own money.
While I believe you should spend the company’s money as if it were your own,
spending a company’s money professionally is very different to going shopping
with it – and doing this without procurement is asking for trouble. Business
departments can also become very defensive about “their functions spend”.
Phrases I hear include “it’s different here” or “what do you know about what my
function does?”. Procurement’s standard approach does not therefore fit every
spend category. One reason why businesses lack trust in us is because we have
been too accommodating with non-procurement leaders joining our profession from
outside. This is unique to procurement. Finance and legal are more restrictive
about who joins them. This may explain why we have so many different versions
of procurement.
Diversity can be good, however it can also weaken our message and the value of
our proposition.
To confront non-controlled strategic spend, procurement professionals typically
try a number of tactics: We might ask senior leaders to instruct the business
to behave (never good for our credibility); or we win them over by charm and
reason. If procurement lacks the breadth of skills to find a voice, then
internal business stakeholders lock out procurement. We then become the victim
who blames the business for not involving us.

The
threat of external consultantsFailing
to unlock these spend categories opens the way for external consultants to make
a breakthrough with the business. When the consultants arrive the business and
the internal team are an afterthought as they focus on reaping the benefits.
External consultants always benefit from having savings delivered. This does
not engender trust and gives people a reason to disengage. External consultants
can often have an effect of leaving debris in their wake and driving a wedge
between procurement and the rest of the business. This makes for an
unsatisfactory and unsustainable engagement model. Of course, none of this is
especially helped when procurement has a savings target. This causes friction
within the business, with disagreements around who gets the credit.
It is no secret that people enjoy spending money. And a business is no
exception.
Procurement teams are allowed to manage low-risk low-value items. However, no
other function experiences an exclusion zone on the big ticket items in the way
that procurement does.

The
way forwardAcademic
qualifications are useful and should be taught. However, strong governance and
structure are essential as procurement in isolation will not work. A single
process will not work. Short-term targets will not work. Procurement must
engage with the broader business. This requires additional skills to
traditional procurement capabilities including business and relationship soft
skills. A lack of a training strategy is a key reason why procurement is still
not a core business function.
By acquiring new skills this helps procurement to articulate risk and
opportunity and talk the same language as the rest of the business. We can then
define what is fit for purpose. This strengthens our case for a seat at the
boardroom table when the really important spend decisions are being made.
Crucially, when we do get our moment, we must explain our message in business
words, and not “procurement speak”.

This is a lightly edited version, reprinted with permission on Bespoke
Procurement Bulletin. Stephen Wills is the founder and Managing Director of
Procurement Central

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